By Lucian Newman III, MD

As fate would have it, the assembly of accurate information on patient care may have more of an effect on the assessment of a physician’s care than the care itself. I know—this is a disgusting concept. This represents the encroachment of bureaucracy squarely in the middle of the previously sacrosanct doctor–patient relationship. The future aligns with those who learn the benefits of self-preservation, gained by an understanding of how medical facilities and physicians will be judged and paid. One important subject to investigate is Diagnosis-Related Groups (DRGs).

DRGs are a means of classifying a patient under a particular group where those assigned are likely to need a similar level of hospital resources for their care. This allows hospital administrators to more accurately determine the type of resources needed to treat a particular group and to predict more closely, the cost of that treatment.

The system was developed in 1982 by Robert B. Fetter, PhD, Yale School of Management, and John D. Thompson, MPH, Yale School of Public Health, both in New Haven, Conn., in an effort to quantify hospital care. The system was to be used to help hospital administrators control physician behavior. Cost-based care, which was used before this, was arbitrary and unpredictable. By assigning patients to a specific DRG, the onus is on facilities to work within a more predictable and structured reimbursement system.

The DRG system, comprising approximately 500 groups, takes account of all patients admitted to acute care in the hospital. Each DRG has a payment weight assigned to it, allowing the hospital to determine how much it can charge for its services. Weighting is based on a hospital’s geographic location; whether or not it is a teaching hospital; the percentage of low-income patients in the group; and whether a particular case is more expensive than usual.

By its nature, the DRG system creates more opportunity for medical facilities to benefit financially from maintaining accurate documentation.

Deciding on the most appropriate DRG level to assign a patient is determined by several factors including the International Classification of Diseases (ICD) code or codes recorded during hospital admission. There are generally three levels for major disease categories, with a higher weight given for more serious illnesses. ICD diagnoses are assigned to one of three categories: neutral, comorbid condition (CC), or major comorbid condition (MCC). Documentation of an MCC condition will trigger the highest DRG level for that condition. For example, if when performing an appendectomy, a physician simply records the diagnosis as “appendicitis,” the lowest or neutral DRG category will be applied. Recording the condition as “acute appendicitis,” means that the CC category will be applied. An abscess or peritonitis falls under the MCC category, the highest level of DRG assignment.

The difference in reimbursement to the medical facility can double or triple based on simple and accurate documentation (Tables 1 and 2) and the numbers grow considerably larger for major bowel procedures (Table 3). However, physicians are not trained coding professionals and many openly state that having to focus on such specifics detracts from actual patient care.

Table 1. MS-DRG Assignment: Appendectomy Without Complicated Principal Diagnosis
Without CC or MC With CC With MCC
428 Congestive heart failure 428.1 Left heart failure 428.33 Acute on chronic diastolic heart failure
250 Diabetes mellitus 253x Diabetes, uncontrolled 250.22 Diabetes with hyperosmolarity, type 2
285.9 Anemia 285.1 Acute posthemorrhagic anemia 785.59 Hemorrhagic shock due to disease
278.0 Obesity 278.01 Morbid obesity
Table 2. MS-DRG Assignment: Appendectomy With Peritoneal Abscess
Without CC or MCC With CC With MCC
250 Diabetes mellitus 253.x Diabetes, uncontrolled 428.33 Acute on chronic diastolic heart failure
285.9 Anemia 285.1 Acute posthemorrhagic anemia 250.22 Diabetes with hyperosmolarity, type 2
278.0 Obesity 278.01 Morbid obesity 785.59 Hemorrhagic shock due to disease
Table 3. MS-DRG Assignment: Major Small and Large Bowel Procedures
Without CC or MCC With CC With MCC
585 Chronic kidney disease 585.4 Chronic kidney disease, stage IV 428.21 End-stage renal failure
250 Diabetes mellitus 253.x Diabetes, uncontrolled 250.22 Diabetes with hyperosmolarity, type 2
285.9 Anemia 285.1 Acute posthemorrhagic anemia 785.59 Hemorrhagic shock due to disease
278.0 Obesity 278.01 Morbid obesity

The same system is being used to judge the quality of care that a physician delivers. Because each admission or procedure is attributed to an individual physician, physicians are given a score based on the severity of a patient’s documented illness. If the documentation is nonspecific, this forms the assumption that a patient has fewer morbidities, costs less to care for and requires a shorter hospital length of stay. Physicians who maintain more accurate documentation procedures will fare better than those who may provide equal quality of care but do not document as well.

This information can be used to paint a picture of a physician’s behavior. It could be extrapolated that the billions of dollars spent by the health care industry to advertise hospital excellence, will potentially be trumped by actual discharge data. Safety and quality assessments also are affected by accurate documentation.

Surgeons everywhere—whether in private practice or employed—should invest the time required to properly maintain patient records. By doing so, the appropriate DRG will be assigned and both medical facility and physician will benefit.


Dr. Newman is a general surgeon in Gadsden, Alabama, and founder and CMO of ComplyMD.